-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Olkz3xnWPxpOZ+fyDYV1+RL09fH5zE0ltSUzecO86O0rE3aVnLI+3T6Zun3q2lX5 0HwBUabdTxYBNao3sEq3Mg== 0000950124-97-005731.txt : 19971110 0000950124-97-005731.hdr.sgml : 19971110 ACCESSION NUMBER: 0000950124-97-005731 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971107 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAPITAL DIRECTIONS INC CENTRAL INDEX KEY: 0000830157 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 382781737 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-20417 FILM NUMBER: 97710129 BUSINESS ADDRESS: STREET 1: 322 S JEFFERSON ST CITY: MASON STATE: MI ZIP: 48854 BUSINESS PHONE: 5176760500 MAIL ADDRESS: STREET 2: P O BOX 130 CITY: MASON STATE: MI ZIP: 48854-0130 10-Q 1 FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 For the quarter period ended Sept 30, 1997 Commission file number 33-20417 Capital Directions, Inc. ------------------------------------------------------ (Exact name of registrant as specified in its charter) MICHIGAN 38-2781737 - -------------------------------- --------------------------------------- (State of other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) 322 South Jefferson St., Mason, Michigan 48854-0130 - ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (517) 676-0500 ---------------- None --------------------------------------------------- Former name, former address and former fiscal year, if changed since last report Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- As of October 27, 1997, the registrant had outstanding 297,528 shares of common stock having a par value of $5 per share. 2 CAPITAL DIRECTIONS, INC. INDEX TO FORM 10-Q
Page Number ------ PART I - FINANCIAL INFORMATION - ------------------------------ Item 1. Consolidated Balance Sheet September 30, 1997 and December 31, 1996.......... 1 Consolidated Statement of Income for three and nine month periods ended September 30, 1997 and 1996........................ 2 Consolidated Statement of Cash Flows for nine month periods ended September 30, 1997 and 1996........................ 3 Changes in Shareholders' Equity for nine months ended September 30, 1997............... 4 Notes to interim Consolidated Financial Statements. 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations..... 6 - 9 PART II - OTHER INFORMATION - --------------------------- Item 1. Legal proceedings................................. 10 Item 2. Changes in securities............................. 10 Item 3. Defaults upon senior securities................... 10 Item 4. Submission of matters to a vote of security holders................................. 10 Item 5. Other information................................. 10 Item 6. Exhibits and reports on Form 8-K.................. 10 Item 7. Signatures........................................ 11 Index to exhibits................................. 12
3 PART I CAPITAL DIRECTIONS, INC. CONSOLIDATED BALANCE SHEET -------------------------- (IN THOUSANDS)
SEPT. 30, DEC. 31, 1997 1996 (UNAUDITED) (UNAUDITED) ----------------------- Assets Cash and non interest bearing deposits ........... $ 2,820 $ 2,538 Interest bearing deposits ........................ 0 139 Federal funds sold ............................... 0 2,800 ------- ------- Total cash and cash equivalents 2,820 5,477 Securities available for sale ....................... 9,268 10,100 Securities held to maturity (fair value of $8,165 as of Sept 30, 1997 and $9,230 as of December 31, 1996) U.S. Government and agencies ..................... 3,104 3,551 State and municipal .............................. 4,850 5,482 Federal Home Loan Bank stock ........................ 364 364 ------- ------- Total securities 17,586 19,497 Loans, net of unearned income: Commercial and agricultural ...................... 3,438 4,453 Installment ...................................... 3,632 3,739 Real estate mortgage ............................. 50,472 43,600 ------- ------- Total loans 57,542 51,792 Allowance for loan losses ........................ -1,044 -1,020 ------- ------- Net loans 56,498 50,772 Premises and equipment, net ...................... 653 567 Accrued interest receivable and other assets ..... 2,891 2,607 ------- ------- Total assets $80,448 $78,920 ======= ======= Liabilities and shareholders' equity Liabilities Deposits Non interest bearing ............................. $ 8,664 $10,356 Interest bearing ................................. 56,630 56,153 ------- ------- Total deposits 65,294 66,509 Long-term Federal Home Loan Bank borrowings ....... 3,824 1,913 Accrued interest payable and other liabilities .... 1,314 1,101 ------- ------- Total liabilities 70,432 69,523 Shareholders' equity Common stock: $5 par value, 1,300,000 shares authorized; 297,528 shares outstanding ......... 1,488 1,487 Additional paid in capital ....................... 2,561 2,559 Retained earnings ................................ 5,928 5,319 Net unrealized gains/(losses) on securities available for sale, net of tax of $17 in 1996 and $20 in 1997 .................................. 39 32 ------- ------- Total shareholders' equity 10,016 9,397 ------- ------- Total liabilities and shareholders' equity $80,448 $78,920 ======= =======
See accompanying notes to consolidated financial statements. -1- 4 CONSOLIDATED STATEMENT OF INCOME -------------------------------- (IN THOUSANDS EXCEPT PER SHARE DATA)
THREE MONTHS ENDED NINE MONTHS ENDED SEPT. 30, SEPT. 30, 1997 1996 1997 1996 (UNAUDITED) (UNAUDITED) ----------------------- ----------------------- Interest and dividend income: Loans, including fees ............................ $ 1,279 $ 1,106 $ 3,620 $ 3,324 Federal funds sold ............................... Securities: Taxable ........................................ 228 253 684 665 Tax exempt ..................................... 58 64 179 195 Other interest income ............................ Dividends on Federal Home Loan Bank stock ........ 24 16 61 118 ------- ------- ------- ------- Total interest and dividend income 1,589 1,439 4,544 4,302 Interest expense: Deposits ......................................... 617 570 1,759 1,736 Short-term borrowings ............................ 1 0 10 0 Long-term Federal home Loan Bank borrowings ...... 62 32 144 97 ------- ------- ------- ------- Total interest expense 680 602 1,913 1,833 ------- ------- ------- ------- Net interest income ............................... 909 837 2,631 2,469 Provision for loan losses ......................... 0 0 0 0 ------- ------- ------- ------- Net interest income after provision for loan losses 909 837 2,631 2,469 Non interest income: Service charges on deposits ...................... 65 65 193 203 Monex investment commission fees ................. 0 15 0 139 Other income ..................................... 71 62 190 186 Gain on sale of loans ............................ 0 34 7 34 Gain or (Loss) on sale of securities) ............ (18) 0 (13) 0 ------- ------- ------- ------- Total non interest income 118 176 377 562 Non interest expense: Salaries and employee benefits ................... 337 309 1,021 967 Premises and equipment ........................... 82 98 248 292 Monex investment sales expenses .................. 0 24 0 147 Other operating expenses ......................... 161 140 468 428 ------- ------- ------- ------- Total non interest expense 580 571 1,737 1,834 ------- ------- ------- ------- Income before income tax expense .................. 447 442 1,271 1,197 Income tax expense ................................ 129 129 361 339 ------- ------- ------- ------- Net income ........................................ $ 318 $ 313 $ 910 $ 858 ======= ======= ======= ======= Average common shares outstanding 297,443 297,428 297,443 297,428 Earnings per common share $1.07 $1.05 $3.06 $2.88 Dividends per share of common stock, declared .35 .30 1.01 .84
See accompanying notes to consolidated financial statements -2- 5 CAPITAL DIRECTIONS, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (IN THOUSANDS)
NINE MONTHS ENDED SEPT 30, 1997 1996 (UNAUDITED) ------------------- Net cash from operating activities................. $ 970 $ 896 -------- -------- Cash flows from investing activities Proceeds from maturities or sale of securities... 2,820 3,038 Principal payments on securities................. 693 774 Purchase of securities........................... (1,647) (8,236) Net change in loans.............................. (5,726) (13) Premises and equipment expenditures.............. (163) (28) -------- -------- Net cash from investing activities................. (4,023) (4,465) -------- -------- Cash flows from financing activities Net change in deposits........................... (1,215) (3,154) Net change in long-term borrowing................ 1,911 208 Dividends paid................................... (300) (250) -------- -------- Net cash from financing activities................. 396 (3,196) -------- -------- Net change in cash and cash equivalents............ (2,657) (6,765) Cash and cash equivalents at beginning of year... 5,477 9,775 -------- -------- Cash and cash equivalents September 30........... $ 2,820 $ 3,010 ======== ======== Supplemental disclosures of cash flow information Cash paid during the year for Interest....................................... $ 1,894 $ 1,874 Income Taxes - Federal......................... $ 380 $ 424
See accompanying notes to consolidated financial statements -3- 6 CAPITAL DIRECTIONS, INC. ------------------------ CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR NINE MONTHS ENDED SEPTEMBER 30, 1997 (IN THOUSANDS) Balance - January 1, 1997................................... $ 9,397 Net income through September 30............................ 910 Net change in unrealized gain/(loss) on securities available for sale, net of tax of $2...................... 6 Additional paid in capital from stock issue................ 3 Cash dividends through September 30 ($ 1.01 per share)..... (300) ------- Balance - September 30...................................... $10,016 =======
See accompanying notes to consolidated financial statements -4- 7 CAPITAL DIRECTIONS, INC. NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. In the opinion of management of the Registrant, the accompanying consolidated financial statements contain all adjustments (consisting only of normal recurring items) necessary to present fairly the consolidated financial position of the Registrant as of September 30, 1997 and December 31, 1996, the results of operations and cash flows for the nine month periods ended September 30, 1997 and 1996, and the change in shareholders' equity for the nine month period ended September 30, 1997. 2. Because the results of the operations are so closely related to and responsive to changes in economic conditions, the results for any interim period are not necessarily indicative of the results than can be expected for future periods. 3. The accompanying unaudited consolidated financial statements should be read in conjunction with the notes to consolidated financial statements contained in the 1996 Annual Report. 4. Management determines the adequacy of the allowance for loan losses based on an evaluation of the loan portfolio, recent loss experience, current economic conditions and other pertinent factors. Non-performing loans, which includes loans contractually past due ninety days or more; loans accounted for on a non-accrual basis and loans whose terms have been renegotiated to provide a reduction or deferral of interest or principal because of deterioration in the financial position of the borrower; amounted to $162,000 at September 30, 1997 and 172,000 at December 31, 1996, summarized as follows:
Sept. 30, December 31, Non-performing loans 1997 1996 --------------------------------------- --------- ------------- Non-accrual............................ $ 20,000 48,000 90 days or more past due............... 90,000 70,000 Renegotiated........................... 52,000 54,000 -------- -------- Total.................................. $162,000 $172,000 ======== ========
The renegotiated loans are all in compliance with the modified terms for both periods. As of September 30, 1997 in accordance with SFAS No. 114, as amended (Accounting by Creditors for Impairment of a loan), and as the registrant has defined in the 1996 Annual Report, there were no loans considered impaired. 5. Following is a summary of activity in the allowance for loan losses for the nine months ended September 30;
1997 1996 (In Thousands) Balance - beginning of period............... $1,020 $ 995 Provision charged to operating expense...... 0 0 Loans charged-off........................... (9) (44) Recoveries.................................. 33 60 ------ ------ Balance - end of period.................... $1,044 $1,011 ====== ======
6. Federal income tax expensed is calculated using annualized rates on the taxable income generated during the respective periods. -5- 8 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS_OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of financial condition and results of operations provides additional information to assess the consolidated financial statements of the Registrant and its wholly-owned subsidiaries. The discussion should be read in conjunction with those statements. The Company is not aware of any market or institutional trends, events, or circumstances that will have or are reasonably likely to have a material effect on liquidity, capital resources, or results of operations except as discussed herein. Also, the Company is not aware of any current recommendations by regulatory authorities which will have such effect if implemented. FINANCIAL CONDITION Net interest income increased 6.56% when compared to the same period in 1996. The increase is a result of growth in loan outstandings. At September 30, 1997, loan outstandings increased 15.81% over September 30, 1996. Real estate mortgage lending continues to show strong growth. Net interest margin of 5.06% for the first nine months of 1997 compares favorably to 4.92% for the same period in 1996. The Bank accessed long term FHLB funding during this period to match assets of like term. Allowance for Loan Loss remains strong. At September 30, 1997 the allowance was equal to 1.81% of total loans outstanding, down slightly from 2.03% on September 30, 1996 and 1.97% on December 31, 1996. RESULTS OF OPERATIONS Net earnings for the third quarter ended September 30, 1997 was $318,000, or $1.07 per share compared to earnings of $313,000, or $1.05 per share for the same period in 1996. For the nine months ended September 30, 1997, net earnings were $910,000 or $3.06 per share compared to $858,000, or $2.88 per share for the same period in 1996. Cost control, increased margin, strong loan demand and excellent credit quality contributed to the 6.06% year to date improvement in earnings. The increase in margin resulted in a $162,000 increase in net interest income for the first nine months of 1997 compared to the same period in 1996. A decrease in non interest income has been offset with a comparable reduction in non interest expense. -6- 9 LIQUIDITY AND INTEREST RATE SENSITIVITY MANAGEMENT The primary objective of asset/liability management is to assure adequate liquidity and net interest income by maintaining appropriate maturities and balances between interest sensitive earning assets and interest bearing liabilities. Liquidity management insures sufficient funds are maintained to meet the cash withdrawal requirements of depositors and the credit demands of borrowers. Sources of liquidity include: federal funds sold, investment security maturities, and pay downs. The Bank maintained a net average balance of $1,510,000 in Federal Funds sold during the first nine months of 1997. The Bank is a member of the Federal Home Loan Bank system for several reasons: access to an alternate funding source, lower cost for credit services, and an alternate tool to manage interest rate risk. In March and May of 1997, the Bank used this source of funding to directly offset loans of like terms and conditions. Other sources of liquidity include: internally generated cash flow, repayments and maturities of loans, borrowing, and growth in core deposits. At September 30, 1997, the securities available for sale were valued at $9,268,000. Interest rate sensitivity management seeks to maximize net interest margins through periods of changing interest rates. The Bank develops strategies to assure that desired levels of interest sensitive assets and interest bearing liabilities mature or reprice within selected time frames. Strategies include the use of variable rate loan products as well as managing deposit accounts and maturities in the investment portfolio. The following chart, using recommended regulatory standards, reflects "the rate sensitive position" or the difference between loans and investments, and liabilities that mature or reprice within the next year and beyond. The financial industry has generally referred to this difference as "GAP" and its handling as "GAP Management". At September 30, 1997, the percentage of rate sensitive assets to rate sensitive liabilities within the one-year time horizon was 101%. The chart shows the Bank's GAP position as of September 30, 1997. The Bank has an asset sensitive position within one year of $378,000, which indicates higher net interest income may be earned if rates increase during the period. A new program was implemented which measured the rate sensitivity of our non maturity deposits. This refines the GAP model to give a better indication of our rate sensitivity. Due to some of the limitations of GAP analysis, price modeling is also used to enhance measurement and control. -7- 10 ASSETS SUBJECT TO INTEREST RATE ADJUSTMENT WITHIN TIME HORIZON TIME HORIZONS
IMMEDIATE AND > 30 DAYS TYPE OF ASSET: < THAN 30 DAYS < 90 DAYS 2ND QUARTER 3RD QUARTER 4TH QUARTER ANNUAL TOTAL ============== ============= =========== =========== =========== =========== ============ TOTAL COM. LOANS 5,531 9.73% 586 9.43% 220 8.91% 876 8.44% 201 8.33% 7,414 9.49% TOTAL CONSUMER LOANS 302 9.62% 400 10.51% 600 10.51% 600 10.51% 600 10.51% 2,502 10.41% CONSUMER RUNOFF OFFSET TOTAL REV. CREDIT 4,412 9.68% 0 .00% 0 .00% 0 .00% 0 .00% 4,412 9.68% TOTAL MTGE. LOANS 340 8.12% 2,301 8.28% 2,707 8.18% 3,045 8.29% 5,175 8.31% 13,568 8.27% MORTGAGE RUNOFF OFFSET TOTAL OTHER MTGES. 445 7.88% 905 8.85% 109 7.18% 109 7.18% 109 7.18% 1,677 8.27% RESERVE FOR LN. LOSS 0 .00% 0 .00% 0 .00% 0 .00% 0 .00% 0 .00% ------------- ------------ ------------ ------------ ----------- ------------ TOTAL LOANS 11,030 9.58% 4,192 8.78% 3,636 8.58% 4,630 8.58% 6,085 8.51% 29,573 8.97% INVESTMENTS-MUNI'S 45 7.93% 0 .00% 642 7.45% 170 7.52% 408 6.63% 1,265 7.21% FED FUNDS 0 .00% 0 .00% 0 .00% 0 .00% 0 .00% 0 .00% CORPORATES 1,202 5.41% 0 .00% 0 .00% 0 .00% 0 .00% 1,202 5.41% MTG. BACKED PAYDOWNS 67 6.26% 133 6.26% 200 6.26% 200 6.26% 200 6.26% 800 6.26% INVEST-CMO'S FLOAT 38 6.55% 0 .00% 0 .00% 0 .00% 0 .00% 38 6.55% INVESTMENTS-ARM'S 564 7.55% 0 .00% 0 .00% 1,817 6.93% 0 .00% 2,381 7.08% INVESTMENTS-GOVT'S 364 7.25% 0 .00% 522 5.78% 513 6.79% 1,000 6.20% 2,399 6.39% ------------- ------------ ------------ ------------ ----------- ------------ TOTAL INVESTMENTS 2,280 6.33% 133 6.26% 1,364 6.64% 2,700 6.89% 1,608 6.32% 8,085 6.56% TOTAL EARNING ASSETS 13,310 9.03% 4,325 8.70% 5,000 8.05% 7,330 7.96% 7,693 8.05% 37,658 8.45% NON-EARNING ASSETS 0 .00% 0 .00% 0 .00% 0 .00% 0 .00% 0 .00% ------------- ------------ ------------ ------------ ----------- ------------ TOTAL ASSETS 13,310 9.03% 4,325 8.70% 5,000 8.05% 7,330 7.96% 7,693 8.05% 37,658 8.45% TYPE OF ASSET: 13 - 36 MTHS 37 - 60 MTHS OVER 5 YEARS GRAND TOTAL ============== ============= ============= ============== ============= TOTAL COM. LOANS 3,122 8.90% 4,461 9.12% 2,236 8.98% 17,233 9.22% TOTAL CONSUMER LOANS 1,856 10.60% 1,283 10.60% 0 .00% 5,641 10.51% CONSUMER RUNOFF OFFSET -2,400 10.51% TOTAL REV. CREDIT 0 .00% 0 .00% 0 .00% 4,412 9.68% TOTAL MTGE. LOANS 1,851 8.99% 1,446 8.44% 18,103 7.86% 34,968 8.10% MORTGAGE RUNOFF OFFSET -4,000 8.10% TOTAL OTHER MTGES. 0 .00% 0 .00% 11 4.00% 1,688 8.52% RESERVE FOR LN. LOSS 0 .00% 0 .00% 0 .00% -1,044 .00% ------------- ------------ ------------- ------------- TOTAL LOANS 6,829 9.39% 7,190 9.25% 20,350 7.98% 56,498 8.87% INVESTMENTS-MUNI'S 713 7.95% 715 7.54% 2,168 7.52% 4,861 7.51% FED FUNDS 0 .00% 0 .00% 0 .00% 0 .00% CORPORATES 2,217 6.84% 528 6.49% 0 .00% 3,947 6.36% MTG. BACKED PAYDOWNS 0 6.26% INVEST-CMO'S FLOAT 0 .00% 0 .00% 0 .00% 38 6.55% INVESTMENTS-ARM'S 0 .00% 0 .00% 416 6.34% 2,797 6.97% INVESTMENTS-GOVT'S 1,147 6.28% 545 6.91% 1,803 6.58% 5,894 6.48% ------------- ------------ ------------- ------------- TOTAL INVESTMENTS 4,077 6.88% 1,788 7.04% 4,387 7.02% 17,537 6.81% TOTAL EARNING ASSETS 10,906 8.45% 8,978 8.81% 24,737 7.81% 74,035 8.38% NON-EARNING ASSETS 0 .00% 0 .00% 0 .00% 6,243 .00% ------------- ------------ ------------- ------------- TOTAL ASSETS 10,906 8.45% 8,978 8.81% 24,737 7.81% 80,278 7.73%
LIABILITIES SUBJECT TO INTEREST RATE ADJUSTMENT WITHIN TIME HORIZON
IMMEDIATE AND > 30 DAYS TYPE OF LIABILITY: < THAN 30 DAYS < 90 DAYS 2ND QUARTER 3RD QUARTER 4TH QUARTER ================== ============== ============ =========== ============= ============= NON-INT. BEARING DDA 321 .00% 634 .00% 1,042 .00% 955 .00% 955 .00% NOW ACCOUNTS 724 1.95% 1,457 1.95% 698 1.95% 741 1.95% 741 1.95% NEGOTIATED NOW 0 3.75% 0 3.75% 0 .00% 0 .00% 0 .00% MONEY MARKET SAVINGS 1,073 3.56% 2,146 3.56% 1,073 3.56% 1,073 3.56% 1,073 3.56% ------------- ------------ ------------ ------------ ------------ TOTAL DDA ACCOUNTS 2,119 2.47% 4,237 2.47% 2,813 1.84% 2,770 1.90% 2,770 1.90% TOTAL SAVINGS ACCTS. 523 3.56% 576 3.56% 733 3.56% 733 3.56% 733 3.56% TOTAL COD 5,386 5.41% 3,935 5.63% 4,271 5.31% 2,718 5.43% 2,719 5.52% FED FUNDS & OTHER 0 .00% 0 .00% 157 6.23% 86 5.73% 0 00% ------------- ------------ ------------ ------------ ------------ TOTAL DEPOSITS 8,028 4.52% 8,748 3.97% 7,975 3.94% 6,307 3.67% 6,222 3.68% OTHER LIABILITIES 0 .00% 0 .00% 0 .00% 0 .00% 0 .00% ------------- ------------ ------------ ------------ ------------ TOTAL LIABILITIES 8,028 4.52% 8,748 3.97% 7,975 3.94% 6,307 3.67% 6,222 3.68% TOTAL CAPITAL 0 .00% 0 .00% 0 .00% 0 .00% 0 .00% ------------- ------------ ------------ ------------ ------------ TOTAL LIAB. & CAP. 8,028 4.52% 8,748 3.97% 7,975 3.94% 6,307 3.67% 6,222 3.68% - ------------------------------------------------------------------------------------------------------------------------- GAP FIGURES 5,282 -4,423 -2,975 1,023 1,471 CUMULATIVE GAP 5,282 859 -2,115 -1,093 378 NET POSITION AS A % OF TOTAL ASSETS 6.58% 1.07% -2.64% -1.36% .47% RSA AS A % OF RSL 165.79% 105.12% 91.45% 96.48% 101.01% TYPE OF LIABILITY ANNUAL TOTAL 13 - 36 MTHS 37 - 60 MTHS OVER 5 YEARS GRAND TOTAL ================= ============ ============ ============ ============ =========== NON-INT. BEARING DDA 3,909 .00% 2,172 .00% 2,172 .00% 434 .00% 8,686 .00% NOW ACCOUNTS 4,361 1.95% 1,744 1.95% 1,744 1.95% 872 1.95% 8,722 1.95% NEGOTIATED NOW 0 3.75% 0 .00% 0 .00% 0 .00% 0 3.75% MONEY MARKET SAVINGS 6,439 3.56% 1,610 3.56% 1,073 3.56% 1,610 3.56% 10,732 3.56% ------------- ------------ ------------- ------------- ------------- TOTAL DDA ACCOUNTS 14,709 2.14% 5,526 1.65% 4,989 1.45% 2,916 2.55% 28,140 1.96% TOTAL SAVINGS ACCTS. 3,299 3.56% 2,175 3.56% 2,040 3.56% 3,043 3.56% 10,557 3.56% TOTAL COD 19,029 5.45% 6,522 6.33% 1,095 6.35% 0 .00% 26,646 5.71% FED FUNDS & OTHER 243 6.05% 1,941 6.50% 823 6.48% 817 6.10% 3,824 6.38% ------------- ------------ ------------- ------------- ------------- TOTAL DEPOSITS 37,280 3.98% 16,164 4.38% 8,947 2.99% 6,776 3.43% 69,167 3.89% OTHER LIABILITIES 0 .00% 0 .00% 0 .00% 0 .00% 1,078 .00% ------------- ------------ ------------- ------------- ------------- TOTAL LIABILITIES 37,280 3.98% 16,164 4.38% 8,947 2.99% 6,776 3.43% 70,245 3.83% TOTAL CAPITAL 0 .00 0 .00% 0 .00% 10,033 .00% 10,033 .00% ------------- ------------ ------------- ------------- ------------- TOTAL LIAB. & CAP. 37,280 3.98% 16,164 4.38% 8,947 2.99% 16,809 1.38% 80,278 3.35% - ------------------------------------------------------------------------------------------------------------------------------ GAP FIGURES 378 -5,258 31 7,928 0 CUMULATIVE GAP -4,880 -4,849 3,079 NET POSITION AS A % OF TOTAL ASSETS .47% -6.08% -6.04% 3.84% RSA AS A % OF RSL 101.01% 90.87% 92.23% 103.89%
-8- 11 CAPITAL RESOURCES The adequacy of the Corporation's capital is reviewed regularly to ensure that sufficient capital is available to meet current and future funding needs and comply with regulatory requirements. Shareholders' equity increased $612,000 or 6.53% to $9,977,000 at September 30, 1997, which represents 12.40% of total assets. These figures do not include the net unrealized gain on available for sale securities. At December 31, 1996, the similar ratio of shareholders' equity to total assets was 11.87%. These measurements indicate the Corporation has a strong capital position. The "risk-based" capital to asset ratio, as established by the regulatory authorities, was 20.40% as of September 30, 1997 compared to 19.50% at December 31, 1996 as shown below:
Actual Required Excess --------------- ------------- ------------- Amount % Amount % Amount % --------------- ------------- ------------- Risk-based capital September 30, 1997 $10,541,000 20.40 $4,134,000 8.00 $6,407,000 12.40
Bank management does not perceive that future rate changes or inflation will have a material impact on capital adequacy. It is the opinion of Management that capital and shareholders' equity is and will remain adequate for 1997. FEDERAL INCOME TAXES The provision for Federal income taxes for the nine month periods ended September 30, 1997 and 1996 totaled $361,000 and $339,000 respectively. The increase in taxes is reflective of the increase in taxable income for those periods. OTHER MATTERS SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities," was issued by the Financial Accounting Standards Board in 1996. It revises the accounting for transfers of financial assets, such as loans and securities, and for distinguishing between sales and secured borrowings. It is effective for some transactions in 1997 and others in 1998. The anticipated effect on the consolidated financial statements has yet to be determined. The Corporation has created a project task force to examine year 2000 issues and used the steps outlined in the Federal Financial Institutions Examination Council's interagency statement entitled, "Year 2000 Project Management Awareness" as a guideline to insure that all areas affected by this matter are examined and in compliance. The Corporation has not had significant dilution from stock options, therefore, the new calculation methods will not affect future basic earnings per share and diluted earnings per share. The Corporation declared a two-for-one stock split on October 16, 1997 to shareholders of record as of November 3, 1997. -9- 12 PART II Item 1. Legal Proceedings There are no material pending legal proceedings to which the Registrant or its subsidiaries, is a party or which any of its property is subject, except for proceedings which arise in the ordinary course of business. In the opinion of management, pending legal proceedings will not have a material effect on the consolidated financial statements of the Registrant or its subsidiaries as of and for the period ended September 30, 1997. Item 2. Changes in Securities There have been no changes in the Registrant's securities which would cause any shareholder's rights to be materially modified, limited or qualified. Item 3. Defaults Upon Senior Securities There have been no defaults involving senior securities on the part of the Registrant. Item 4. Submission of Matters to a Vote of Security Holders There have been no matters submitted to a vote of the Registrant's security holders. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K 1. Exhibits required by Item 601 of Regulation S-K See Index to Exhibits on page 12. 2. Reports on Form 8-K. No reports on Form 8-K were filed for the three months ended September 30, 1997. -10- 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CAPITAL DIRECTIONS, INC. Date October 27, 1997 By: /s/ Timothy Gaylord ---------------- ------------------------ Timothy Gaylord President Date October 27, 1997 By: /s/ Robert G. Kennedy ---------------- ------------------------- Robert G. Kennedy Treasurer -11- 14 INDEX TO EXHIBITS The following exhibits are filed or incorporated by reference as part of this report: 3 Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession - Consolidation Agreement included in Amendment No. 1 to Form S-4 Registration Statement No. 33-20417 and Form S-8 of the Articles of Incorporation, the related Amendment and By-Laws for the Incentive Stock Option Plan filed July 30, 1997. 4 Instruments Defining the Rights of Security Holders, Including Indentures -- Not applicable 11 Statement Regarding Computation of Per Share Earnings - Not applicable 15 Letter Regarding Unaudited Interim Financial Information - Not applicable 18 Letter Regarding Change in Accounting Principals - Not applicable 19 Previous Unfiled Documents - Not applicable 20 Report Furnished to Security Holders - Not applicable 23 Published Report Regarding Matters Submitted to Vote of Security Holders - Not applicable 24 Consents of Experts and Counsel - Not applicable 25 Power of Attorney - Not applicable 27 Financial Data Schedule - (filed herewith) 28 Additional Exhibits - Not applicable -12- EX-27 2 EX-27
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 1997 10-Q 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 2820 0 0 0 9268 8318 8165 57542 1044 80448 65294 0 1314 3824 0 0 1488 8528 80448 3620 924 0 4544 1759 1913 2631 0 (13) 1737 1271 1271 0 0 910 3.06 0 5.13 20 90 52 0 1020 9 33 1044 60 0 984
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